Governance
The DUCAT token regulates 4 key areas of the Ducat Protocol's development:
How to divide the Protocol's net income between DUCAT tokenholders and the Ducat Reserve—a working capital pool that upholds the Ducat's UNIT/USD peg and protects tokenholders against potential losses due to bad debt
How to tweak the Ducat Protocol's different financial levers (Liquidation Fee, Redemption Fee, Origination Fee, Interest Rate) to adjust how the Protocol prices leverage.
How to regulate the rate of Ducat token emissions, including individual votes on financially-material partnership incentivisation proposals.
How to formulate new governance processes and permissions.
Ducat's governance module is based on Ordinals inscriptions. A canonical ordinal inscription enables every governance process. If that process is to be modified or replaced, a new Ordinal will have to be created, and the Ducat Protocol will have to come to a consensus on the new Ordinal replacing the prior Ordinal.
When a proposer instantiates a new governance proposal, it must stake it with a minimum number of DUCAT tokens. A governance proposal will contain a reference to the Bitcoin Ordinal inscription in question, a layman's description of the proposed change in the governance process, and the code of the new Bitcoin Ordinal, assuming the vote passes.
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